Investment Q&A

Q: Thinking about switching from Saputo (SAP, about a 2.5% position) to A&W. I'm a little under water on Saputo, I can use for a capital loss.

SAP is trading at around a 20-21x multiple, so in my opinion, chances of it running $3 or $4+ more in the short term is fairly limited. Plus, the Saputo family has a 34% voting interest so, I'm guessing, chances of a takeover are fairly limited in the immediate future.

These are the reason's I wouldn't mind selling SAP for a more efficient use of my funds. However, I am having difficulty valuing AW.UN in comparison with SAP. I like AW.UN's monthly dividend. I like the fact that it seems to be a well run business. And I like the fact its just about the perfect size for a large number of players in the food services industry to take them out. However, like I said, I am having difficulty valuing AW.UN. I'm wondering if you can help me out? Is it cheap, fairly valued, or expensive against the backdrop of its growth profile?

Thanks.

John

Q: Hi Peter and Team? I was thinking of buying some PPG industries which trades on the NYSE. I would value your thoughts on this company. Thank you for your help, Tamara

Q: Your thoughts on cwx?
thanks

Q: Hi Peter and Ryan, What would be an appropriate Weighted Average Cost of Capital (WACC) to use to discount GIL's future free cash flows to firm? I am getting a very low WACC estimate of only 4.41% primarily because GIL's Beta is only 0.39. My other assumptions are as follows,

Risk free rate 2.4%
Market risk premium 5.75%
Beta 0.39
2.4% + (5.75% * 0.39) = 4.64%
Resulting cost of Equity 4.64%
Equity weighting 92.1%
After-tax cost of debt 1.7%
Debt weighting 7.9%
(4.64% * 0.921) + (1.7% * 0.079) = 4.41%
Resulting WACC 4.41%

To me WACC of only 4.41% seems too low. Where do I go wrong with above calculation?

Q: Is this stock worth buying at this time? I do not need a dividend and I'm willing to wait for a capital gain.

Q: I own Encana with a loss of nearly 40 %. I'm considering taking a tax loss and replacing EnCana with Seven Generations Energy Ltd. Do you consider that to be a good move? Any better suggestions?

Q: Hi 5i team
I'm looking at adjusting my rrsp holdings
I currently hold
25,000.00 in cig837
255,000.00 in cig686
57,000 in mmf006
39,000.00 in pmo006
I'm thinking that I have to much bond exposure and would like
To move some into vgg eft to get some America company exposure
What are your thoughts
Tks for the input
Sam

Q: Can I please have your candid and honest opinion on the following which I came across recently

"Concordia Healthcare Corp. has essentially been forced to turn its entire business model on its head, according to a Bay Street analyst.
Up until September, the Oakville, Ont.-based pharmaceuticals company built its business by making a series of acquisitions that bumped up profit and revenue – in much the same way Valeant Pharmaceuticals International Inc. did. That formerly successful strategy is now in serious doubt.
“The re-valuing of the sector, coupled with Concordia’s substantial debt load, probably means the end of its financial arbitrage as a means to continue its non-organic [growth] for the foreseeable future” Doug Cooper, an analyst with Beacon Securities, wrote in a recent note to clients.
Concordia’s heavy debt burden stems from its recently completed $2.1-billion (U.S.) acquisition of Amdipharm Mercury Co. Ltd. (AMCo). Concordia was forced to fund a higher portion of the acquisition than planned with debt as opposed to equity. Only $520-million came from an equity increase. The firm had the rotten luck of conducting an equity financing smack in the middle of a stock market storm in the pharma sector. In an interview with The Globe and Mail last month, Mark Thompson, chief executive officer of Concordia, confirmed that the firm didn’t raise as much equity as it had hoped and was forced to make up the shortfall with debt.
“This [heavy debt load] has forced the company to change its strategy from a ‘growth-through-acquisition’ story to purely an internal growth story, driven by the new product launches at AMCo. ... With no imminent acquisition catalysts, we believe the shares will be range bound.”
Mr. Thompson told The Globe that the only acquisitions the firm will consider for the foreseeable future will be small, so called “tuck-in” acquisitions."

I have a current 6% position and considering some tax loss strategy. I reviewed you blog posting
Thanks

Q: A few days ago various analysts posted pretty optimistic reports on CES. Today it dropped six per cent. What is your view on earnings and the company? Is the dividend safe?

Thanks!

Q: With the ISIS news stories, I would think that aerospace and defence stocks would be an area to look at. Do you have a suggestions of stocks in this sector ? Are there canadian dollar stocks that you could recommend?

Thanks

PS- Love the site

Q: With the announcement today of 8-10 % per year dividend increases until 2020 should I buy TRP in lieu of ENB. I was going to add to ENB on the recent weakness

Thx

Q: Peter and Team:
I would like to sell comdev and realise a tidy 25% gain (Thank you very much). To offset this I would like to sell one of four equivalent $ value losers. EFN, CXI, BOS, or TFI.

Regardless of sector weighting in my portfolio could you please suggest the best candidate, and whether I should repurchase in 30 days or move on to something with more upside. (Long horizon portfolio)

Thanks

Phil

Q: Hello Peter & team,

I've noticed that you receive many questions regarding info about short interest data on TSX stocks. As far as I can tell, Yahoo Finance has this data available for free and, I believe, fairly accurate. I was able to check the data for DH that you provided in your latest answer and it seems to be the same: "There are 4.2 million shares of DH shorted on the TSX, or about 4% of the float."

I'm not certain if it's *really* accurate in all cases, since I cannot verify against any other service, but in this particular case it was. Perhaps more checking would be required in order to suggest Yahoo Finance as a viable option for this info.

The short interest data (among many other key metrics) is available under the "Key Statistics" link on the company page returned by the "Quote" request. See for example the page for DH: https://ca.finance.yahoo.com/q/ks?s=DH.TO The data is on the right side of the page under "Share Statistics".

Also, a Yahoo Portfolio can be configured with a column for the "Short Ratio" data.

I hope this helps.

Best,
Iulian

Q: If you HAD to make your best educated guess between gold & oil which is more likely to recover first?

Q: Incredible how you leave investors behind and telling them to sell win at rock bottom.if this was the only company that your advise would be wrong on.it would not be bad.
Scr,avo,win,gxi,bin,sgy....and many more.
Sure after they are out of your portfolio,everything looks fine again
Your track record is getting very lousy the least.
I am very disapointed in your advise

Q: I was surprised that you dropped coverage of this company. I have a position and also feel the pain but how low can it go ... With regard to management, i suppose they did a few good moves in the past if you were confortable with them before the recent events. Are they other factors outside lack of visibility and dividend cut that makes this a sell. It can be a mistake but i don t see the point of selling at these level if the company s balance sheet is still strong with a few years ahead to better position themselves. You general comments are always appreciated. Thank you.

Q: Hi Peter,
The results out today from GRC look quite spectacular, at least on the surface. I have a small position, and added some more today. I wanted to get your thoughts on 2 things: the sustainability of the 10% dividend, and method(s) to estimate fair value for the shares, given that revenue and earnings will likely be quite volatile and unpredictable over the next months/years.
Thanks for your excellent service!

Q: Big moves in Badger, is this some short covering, or is the market reacting to the earnings report. Your comments are greatly appreciated.

cheers
Darcy

Q: Can you give your thoughts on their most recent 1/4 and the company in general, buy,hold, or sell.

Thanks

Q: In reference to another members comment regarding portfolio performance, I agree that it would be important to show both the "losers" and the winning trades. The inclusion of date position was opened and the date closed would be beneficial for all of us.
Please share and consider this request for the portfolios.
Regards,